Fw: Ask the Expert – Quarterly Statement Webcast

USD/CAD X RATE

 

Subject: Ask the Expert – Quarterly Statement Webcast

 

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Web Version

 

Daily Market Update July 13, 2018     For Internal Use Only

Investing during the last leg of a bull market – Client friendly Based on your feedback, we created a client friendly version of the Timing the top DMUs. The article is available on the Volatility in Perspective webpage and by clicking below.  DOWNLOAD ARTICLE     Ask the Expert – Quarterly Statement Webcast Earlier this week, Jodi Wright hosted Sarah Riopelle, Vice President & Senior Portfolio Manager, on the most recent Ask the Expert – Quarterly Statement Webcast. In their discussion, Sarah and Jodi dive into a number of timely topics to provide insights you can leverage in your client conversations. If you were not able to join live, the replay of the webcast can be found here. For those short on time, you can use the table of contents above to navigate to the topic of most interest to you.   Addressing client concerns   Performance strengthened over the past quarter, so investors opening their statements will see strong one-year returns and positive results across the spectrum of RBC Select Portfolios. Despite these positive results, a number of themes in the current market environment have caused concerns among investors. Primarily, these themes include currency volatility, protectionism and the rising interest-rate environment, all of which Sarah addresses in the webcast.   Currency volatility   As we've explored protectionism and rising interest rates in recent DMUs, let's spend some time looking at currency volatility. Over the last few years, we've seen fluctuations in the Canadian dollar relative to the U.S. dollar with it going above $1.40, strengthening to $1.22 and now weakening to around $1.30.     Looking forward, we anticipate the Canadian dollar will continue weakening to our forecasted level of $1.35. This outlook is driven by a number of headwinds facing the Canadian economy, including uncertainty about NAFTA negotiations, deteriorating Canadian competitiveness, high levels of consumer debt and concerns about the housing sector. At the same time, several factors point to further short-term strength in the U.S. dollar such as strong economic momentum, expectations the Fed will hike rates at a fast pace and the fact that the U.S. dollar has yet to reach excessive valuation levels in the current cycle.   How are we managing currencies in our funds?       Within our suite of Portfolio Solutions, we manage currency at both the underlying and top-fund levels. Hedging at the underlying fund level involves strategic hedges in the fixed income funds as well as tactical hedges in both fixed income and equity funds.   At the top-fund level, we don't hedge U.S. dollar exposure on an active, day-to-day basis, but rather at the peaks and troughs of the long-term cycle. Given our outlook for near-term U.S.-dollar strength, Sarah and her team are not ready to put hedges in place at current levels, allowing the portfolios to continue benefiting from their exposure to the U.S. dollar.   Be sure to mark your calendar for the next Ask the Expert webcast on August 8th!     Rate today's note   How would you rate today's message? •HELPFUL •UNHELPFUL     RBC GAM | Market Insights | Tools and Resources | Competitive Intelligence | Archives

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